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Talking Points:
- EUR/GBP Technical Strategy: Short at 0.7325
- Euro Selloff Accelerates Anew After Corrective Bounce Fails to Build Momentum
- Short Trade Active, Looking for Downside Follow-Through Beyond 2-Month Low
The Euro resumed its decline against the British Pound after a meek attempt to launch an upside correction failed to generate momentum. Prices turned lower as expected after putting in a bearish Dark Cloud Cover candlestick pattern, breaking rising trend support guiding the move higher from mid-July lows.
Near-term support is now at 0.7126, the 38.2% Fibonacci expansion. A break below that on a daily closing basis opens the door for a challenge of the 50% level at 0.7088. Alternatively, a reversal back above the 23.6% Fib at 0.7173 – now acting as resistance – clears the way for a test of the 14.6% expansion at 0.7203.
We sold EUR/GBP at 0.7325 and have since booked gains on half of the trade. The remainder of the position remains open to capture any further weakness ahead. The stop-loss has been adjusted to the breakeven level.
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